Government: The Facilitator of Money to Power

Progress itself is not an indication of the representation of popular will, but concessions granted as issues threatened the systemic order and could be remedied without changing the circulation of power within the system.  The social programs that grew out of the great depression was not a triumph of the representation of the popular interest through the legislature.  Conditions were such that if the needs of the poor were left unattended, there was a serious threat of systemic change that may have been forced by a people with little to lose.  FDR is famously quoted for saying it was his administration “which saved the system of private profit and free enterprise after it had been dragged to the brink of ruin”. (1)  The gains achieved for the public through FDRs presidency, was a necessary concession to maintain the power structure.  That isn’t to say FDR was motivated by serving this interest in responding as effectively as he did to the depression.  These concessions in social spending had to be made in order to repair the economy, because although the labor market is great, it is hard to sell things to people without any money.  Had it been the product of representing the interest of the public, the public would have already achieved some of these programs without the catalyst of financial collapse.  

Women’s suffrage and civil rights were won through disruption, where the disruption of not addressing these issues exceeded their usefulness.  They could be addressed without compromising the power structure.  It requires money to bring a candidate, message, or any information into the minds of the public.  Money selects the candidates, so it makes little difference to the general interests of industry which candidate people vote for or who can vote.  Industry has the same general interests, and the substantive difference between candidates through the eyes of industry generally reduces to how the goals of different industries will be prioritized by the government.  All legislation is created intent on the appearance of serving popular interests, but all legislation is industry benefiting, wrapped in the words of the pitchmen who enjoy celebrity careers, with public salaries, brought to you by industry and American ignorance. Although I acknowledge the accomplishments of civil disobedience in the opening paragraph, I do not think these actions have very much influence on policy anymore; causes are exaggerated and fail to draw enough concern from the general public to pose any serious threat to order. 

 I’m drawing primarily from a 2014 and 2018 paper published by the prominent academic authority on the subject of investment politics Thomas Ferguson, along with his esteemed colleagues Paul Jorgenson, and Lie Chen. The trio published a 2018 paper examining the role of money in politics in the 2016 election that also explored popular points of significance in consideration of their contributions to the result, as measured by the work of respected political scientists.  

The precedent set in the 2016 election was Bernie Sanders ability to be fiercely competitive in a major party primary race through almost exclusively small contributions.  Ferguson states that no large firms or PACs supported Sanders, that larger donations were actually summed donations.  I have no reason to doubt it, but it is interesting to me because although it pales in comparison to Clinton, Trump, Romney, and Obama, they reported 5% of Sanders campaign money came from donations of $100,000 or more.  He raised 240 million, meaning 12 million was donations exceeding $100,000, and it could have come from as many as 120 different sources.  Even if it didn’t come from big business or PACs, I’d still like to know where it came from and which entities will exercise influence in a Sanders presidency.     

Trump, although not nearly to the degree of Sanders received a sizable portion of campaign contributions through small donations comparable to the level of Obama in 2012.  However, in Trump’s victory, the evolution of poll numbers corresponds to huge infusions of money from wealth and industry. Ferguson’s paper on the 2016 election references political science data evaluating the evidence of popular theories and shows how the evidence fails to support the conclusion that the role Russia played, or incidents like the Comey revelations, or the Clinton emails, actually had enough of an effect on the outcome to cause Clinton to lose the election.  

Ferguson writes 

“What happened in the final weeks of the campaign was extraordinary. Firstly, a giant wave of dark money poured into Trump’s own campaign – one that towered over anything in 2016 or even Mitt Romney’s munificently financed 2012 effort… The gushing torrent, along with all the other funds from identifiable donors that flowed in the campaign’s final stages should refocus debates about that period.  Maybe all that happened is money talked…”. (2)  

Ferguson highlights how Clinton’s decline coincided with the decline of democratic senate candidates, in part because of a lack of confidence in the democrats to win the house.  If you’re investing in campaigns, it doesn’t make sense to invest in candidates and a party that you don’t believe is going to win a majority.  More money went to the republicans, and money that was loyal to democrats stayed home once they were expected to lose the house. 

Just because Bernie was able to remain competitive in the primaries through small donations, does not mean his campaign wouldn’t have hit financial trouble in the general election if he has to rely on small donations.  If he doesn’t rely on small donations in the general election it could seriously harm his campaign, although I doubt anyone would take it seriously or even know until after he was already elected.   

The United States government is today and has been historically, a facilitator of wealth to power: meaning legislative power is directed by money. The voice of an individual, or even a group in this government, is equal to the amount of money they have relative to competing interests. If the competing interest is industry as a whole, there isn’t enough money in the bottom 80% of the wealth distribution for the population to compete.  To put it another way, a majority of the population has no representation in the federal government.  

There are politicians who seem to represent popular interest, and in the rare occasions where a politician intends to serve a popular interest, they are prevented from doing so from the majority.  It doesn’t matter if you have 50, because you have 485 who are there to protect the interests that put them there.  Most people have no representation because their interest cannot be represented to power.

In 2016 75% of Trump’s campaign was financed by donations exceeding $10,000, and 72% of Clinton’s campaign was financed from donations of at least $10,000. (3)  

 In the 2012 election “almost two thirds of itemized financing” for Obama’s campaign were donations of $10,000 or more, for Romney it was more than 70%, while both candidates relied on donations of over $1000 for “about 90% of their funding”. (4) 

Since presidential candidates rely on donations of $10,000 for most itemized campaign funds, without these donors, the candidate is not going to be a serious contender. How many American’s can afford $10,000 to have a political voice?  The median balance of checking accounts is $3400 and over half the population reports not having $500 in savings (5).  Small donations are not altogether insignificant as a total when compared to overall money raised, Obama (37%) 2012 and Trump (38%) 2016 campaign raised over a third of overall funding from donations smaller than 200 dollars; but small contributions are insignificant in terms of carrying an interest.  It is unorganized money, anonymous donations, the result of rhetoric that people mistakenly associate with their own interests. No one is going to the white house with a 50-dollar receipt and using it as leverage for policies by tactfully implying next year they’re going to let that 50 ride on the other guy.  Or they have 50 dollars just like it they’re going to use it to persuade the rest of congress.  

The Affordable Care Act was a good example of this.  A hospital lobbyist told reporters it was understood as a condition of their support that the public option would not be included in the affordable care act and it was not. (6)  They talk to Obama and tell Obama if he includes a public option in the ACA they will not support it.  Obama knows the industry not supporting it means they’re going to talk to the hundreds of representatives and senators they have relationships with and let them know they don’t support it.  It isn’t a threat that if the representative or senator votes for the bill that they won’t receive money from this interest in their reelection bid. However, the representative or senator does know, if he or she votes for it, they’re going to be down some donors next election and their opponent is going to be up some donors.    

To show the reverse, Obama also maintained the ban on imported medications at the direction of pharmaceutical companies.  Now Elmer and Ethel, they gave Obama $50.  Elmer and Ethel cannot schedule a meeting with Obama and influence his decision to ban imported medications by making sure he understands it’s a condition of their support.  Their support is meaningless, because their money doesn’t significantly affect his reelection bid, and Elmer and Ethel cannot persuade congress to vote against it if they don’t support it. 

The point isn’t an attack on the Affordable Care Act, or Obama.  I happen to support the ACA based on the reasoning that if we are going to be subsidizing industry, we may as well subsidize industry in a way where the public gets something worthwhile for their money.  As Obama goes, during his presidency, I hated him enough for his foreign policy, that I didn’t care to pay attention to the half good things he did.  Everything he did good, was a half good, always including something unnecessary to serve industry.  He would probably say it was the only way he could get anything done.  If he did say that, he would be telling the truth.  And that is the reason I brought it up.  I would have respected him more if he was more open about it as president, and maybe he was, I don’t pay a great deal of attention to speeches.  People cannot have a public option for health coverage, that interest cannot be represented, because it is against the interests of industry, and industry, whether the healthcare sector, or any other sector of the economy, is an entrenched interest in congress, capable of influencing a yes or no vote in either the house or the senate or a veto from the president to protect their interests.         

Since a presidential candidate relies on donations in excess of 10,000 dollars for the bulk of his relevant or itemized donations, attempting to carry forward policies which were popular, but adverse to the interest of these wealthy donors, would prevent the candidate from serious contention. A president represents the interest of wealth to power or he doesn’t become president.

In electing representatives and senators, big money actually plays a bigger role in campaign funding than in presidential elections. “Donations from individuals giving $200 or less make up a fairly small wedge in the fund-raising pie: a little over 10 percent of the money collected by House members and about 15 percent for senators.” (7) The remaining 85 to 90 percent of funds came from less than 3/10s of 1 percent of the population.  So once again, in most cases, if you represent the interest of your constituents over the interest of that 3/10th of 1% who is sustaining your campaign with large contributions, your service will be short lived.

Aren’t corporations and wealth simply supporting the candidate or party who will best represent their interest?  If principally, the parties are different, why would the same firm support both parties, and especially in presidential elections both candidates? They both cannot be equally representing your interest, otherwise they cease to be different, and then even worse where is the choice? And if they are the same, it would make much more sense not to fund either, since whichever candidate is elected will be representing your interest. It is an investment in legislative and policy outcomes. Most legislators do very little legislating, most are pitch men with votes for sale. Somehow there is still a debate about whether money in politics is ruining our democracy?  Which is strange because how can you ruin what you never had?

If we look at the 2012 presidential election, the 9 largest health insurance companies gave money to both candidates, defense and air industry as a whole collectively split their money right down the middle between Obama and Romney, the largest investment banks and hedge funds did about the same thing with 48% of their contributions going to Obama, and across nearly every sector of the economy, many of the largest firms supported both candidates. (8)

In 2016, many of the largest firms supported both Clinton and Trump.  If you go to the cited material which is available online, you’ll find a chart on the referenced page.  The chart shows the percentage of firms that supported Clinton, and the percentage of firms that supported Trump, and anytime those percentages total more than 100, this means there are firms who supported both candidates. (9) 

The free speech idea is that a candidate has values and solutions to problems.  People as well as businesses see the candidate as the representative of their values and their interest in the candidate’s ideas.  If this was true, no firm would ever support both candidates, because if both candidates represent your interest it doesn’t matter which candidate is elected.  It also shows the actual differences between candidates who in speech seem so contrasting yet are similar enough for business to support both candidates, which means in the eyes of business, people are divided about candidates on superficial and non-substantive issues.    

Why would a firm waste money by contributing to the campaigns of rival candidates?  Are corporations, who have an obligation to their shareholders to maximize profit wasting shareholder’s money by funding the campaigns of rival candidates?  Or are they investing in policy with insurance?  They do have a preference, so invest 2 to 1 on their preference, maybe 30k on one candidate and 15k on the other, where enough of these promotions may contribute to an edge to their preferred candidate, but they will still maintain good standing with the other candidate should he or she win.  

The following are the conclusions of the Sunlight Foundation Study that analyzed the political spending habits of the 200 most politically active corporations and followed how these corporations benefited from businesses assistance from the federal government, in tax law, subsidies, and government contracts.   

The Sunlight Foundation examined 200 of the most politically active corporations in the United States between 2007 and 2012 and found that during the period these corporations invested 5.8 billion dollars in political spending, and over the same period received 4.4 trillion dollars in federal business support.  The report concludes “…the nation’s most politically active corporations for every dollar invested received $760 from the government,…(and some corporations) received 1000 times or more”. (10)   And many unknown companies who are not large enough to invest in politics had to rely on markets to get a return on their investment.

A Kansas University study found that companies who lobbied for a tax holiday provision in the American Jobs Creation Act of 2004 received “in excess of $220 for every 1 dollar spent.” (11)

The common ideal shared by wealth and the politician is that money should be the measure by which one can gauge his representation. 

Because it is rarely possible to be elected to the federal government without big money, and the only way to attract and obtain big money is to subordinate yourself to the interest of big money; and those interests are fundamentally distinct from the interest of the general population who is without big money, then the interest of wealth is represented at the exclusion of the general population. Those without wealth are without meaningful representation, and policy is decided almost exclusively by at most a few tenths of a percentage of the population. The United States is today, what it was intended to be by those who founded the country: by wealth for wealth.  Which doesn’t mean wealthy individuals, although in some cases it is individuals.  Money is spread out across companies and these companies represent their share-holder’s interest by asserting the company’s interest.  It isn’t a secret, but most people in this country maintain the incompatible idea that they live in a democratic country, while also acknowledging that money directs policy.  

1: Teaching American History “Document: Campaign Address Franklin D. Roosevelt  10/14/1936 

2: Ferguson, Joregenson, Chen, 2018, “Industrial Structure and Party Competition in the age of Hunger Games: Donald Trump and the 2016 Presidential Election” pp7-21 

3: Ferguson, Joregenson, Chen, 2018, “Industrial Structure and Party Competition in the age of Hunger Games: Donald Trump and the 2016 Presidential Election”

4: Party Competition and Industrial Structure in the 2012 Elections: Who’s Really Driving the Taxi to the Dark Side? Thomas Ferguson, Paul Jorgensen, and Lie Chen. Pg 13

5: Value Penguin “Average US Checking Account Balance: Demographic Breakdown”, Source: 2016 Federal Survey of Consumer Finances. – CNN Money: 6 In 10 Americans Don’t have $500 in Their Savings, by Katheryn Vasel 1/12/2017 Source: Bankrate Survey

6: Miles Mogulescu, 5/25/2011, “The Real Reason Obama’s Plan Doesn’t Include a Public Option”.  Huffington Post 

7: Open Secrets Dollarocracy 

8: Ferguson, Jorgensen, and Chen (2012) pg 16

9: Ferguson, Joregenson, Chen, 2018, “Industrial Structure and Party Competition in the age of Hunger Games: Donald Trump and the 2016 Presidential Election” pp 78-80

10: Fixed Fortunes: Biggest Corporate Political Interests, Spend Billions, Get Trillions. Sunlight Foundation , by Bill Allison and Sarah Harkins, 11/17/14

11: Raquel Alexander, Susan Scholz, and Stephen Mazza. “Measuring Rates of Return for Lobbying Expenditures: An Empirical Analysis Under the American Jobs Creation Act” University of Kansas, Lawrence. Pg 1